Kenya: CMA, Cytonn Clash Ropes in Parliament
Embattled Cytonn Investments Management Ltd has called on Kenyan lawmakers to investigate the appointment of Capital Markets Authority (CMA) CEO Wycliffe Shamiah, including his conduct and regulatory policies. The dispute over the trade in illegal investment products spilled onto the floor of the Chamber to the amazement of the investing public.
Market regulator and fund management firm argue over what the regulator sees as selling ‘unlicensed’ and ‘unregulated’ investment products to unsuspecting public, putting more than Ksh 13 billion at risk ($ 119.26 million) from investment funds. Recently, the regulator banned the licensed part of the business – Cytonn Asset Managers – from signing new clients until they change the name of the licensed business and regulated products to stop sowing the seeds. confusion among investors.
Cytonn Investments, through Apollo & Company Advocates, recently asked the National Assembly to investigate Shamiah’s appointment as CMA chief executive effective January 1, 2020, arguing that the appointment had was made by a board of directors whose legality is subject to legal proceedings. Prior to his appointment, Mr. Shamiah had been Director of Market Operations since November 2011 and held several leadership positions in market oversight, research, financial analysis and compliance within the authority.
According to the petition dated August 17, Cytonn said that Shamiah has continued to promote policies that favor the banking sector while stifling capital markets, which has led to bank dominance in the Kenyan economy, forcing entrepreneurs and businesses to rely on bank loans.
“As a result of policies stifling capital markets for the benefit of the banking sector, it has made it difficult to access finance and when it is available the interest rates Kenyans pay are very high,” Cytonn said. .
The company also accuses Shamiah of failing to protect the interests of investors, resulting in a whopping Ksh 180 billion ($ 1.65 billion) loss in investor wealth while doing very little or failing to do so. ‘credible surveys every time investors lose money.
Other accusations against the CMA boss include the inability to put in place policies that support the funding of the government’s affordable housing plan, the inability to implement disclosures about the money market wallet and the violation the equitable administration of justice.
When contacted, Mr. Shamiah declined to comment on the petition saying he would do so at the appropriate time. “I will respond accordingly when the time comes,” Shamiah told The EastAfrican.
In July, MPs through the National Planning and Finance Committee asked the regulator why there was an increase in the number of unregulated and illegal investment products on the market, following a petition from Garissa city legislator Aden Duale.
According to Duale, investors in the capital markets lost more than Ksh36 billion ($ 330.27 million) under the regulator’s watch. The Committee pledged to expand the investigation to other parties, including the Central Bank, Cytonn executives and other entities that orchestrated the loss of investors’ funds.